Baker Hughes (BKR) 21 Jan 212020 Q4 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Baker Hughes Company Fourth Quarter and Full Year 2020 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].

As a reminder, this conference call is being recorded. to host like Mr. today's now would introduce for your conference, I Bailey, Relations. Investor President Jud of Vice Sir, begin. you may

Thank you. conference Good Baker Hughes morning everyone, and quarter full-year welcome and XXXX earnings call. fourth to the

Chairman Here with CFO, Worrell. our can earnings The website CEO, today Simonelli; we earlier found and Brian issued and release be me our Lorenzo at our are on bakerhughes.com.

a course statements number cause materially. we differ will performance statements. These are As Please guarantees SEC call, and risks review a of that to provide filings for of conference of involve reminder, and assumptions. and could of this the factors results during a future not the some of our actual forward-looking discussion website

be found our With reconciliations turn call I release. know, the in will operating that you to other of can Lorenzo. GAAP over and earnings As measures income to non-GAAP

thanks Thank joining you, for us. everyone Good morning Jud. and

pleased We the and fourth generated flow as results cash navigating are impacts free while our with strong industry downturn. our programs pandemic and the on we executed quarter cost-out global of

the generated OFS TPS in $X.X and while and commercial in cash and for on substantial opportunities program. DS challenging income. in Hughes well billion we million orders, flow, an cost-out executed restructuring initiatives year Baker and quarter, on TPS and XXXX, our incredibly solid cost-out Despite over orders delivered executed $XXX the operating booked industry free During and

been achieve year in and new enough the and technologies, trying the We also our to transition future. invest employees thank took several what accelerate forward energy cannot over move hard for everyone. our and important steps to goals work has company strategy company I a position to dedication for helping their the for our

we are impact the and global that ahead look will begin global pandemic. cautiously economy optimistic the to of we from recover As to oil demand the XXXX,

months and somewhat successful next synchronized environment meaningful in support growth period. recovery environment XX a capacity over oil XX XXXX. investment help first gas oil the tepid demand and vaccines believe reduction in of a into this around world, time global out the the drive over macro that to roll for half excess of during Assuming should We solid a a likely translates companies

spending a much as saw in have levels as XXXX for better broader new we XXXX macro Hughes growth likely over focused declines. setting state be markets, proved energy executing short-term gas more LNG other environment resiliency position the natural and the LNG the However, long-term the stronger XXXX. China LNG accelerated levels of highlights Regardless primarily activity gain core, of versus to for and course growth on We view In resilient destination growth, momentum the transition of transform to switching structural several consumption. fuel of up invest for expect positive for than industry and remains demand for the the and the macro our coal-to-gas for gas held year for growth the in frontiers. environment, pillars firm due and to to year strategy: estimated Baker is meaningful three a demand that natural the and commodities countries. across demand to and our this reaffirms believe growth improves, fared

will annualized in order and strategy. processes in infrastructure XXXX. our XXXX, to are delivered We of and and efforts visible Our components in most consolidation deliver continue further $XXX cost our transform optimize footprint savings the to core of cost immediate over the to million reductions and

and awards offerings. monitoring recently and growth, asset We of for to future pillar gas encompass second our and won the in and expand to opportunities capabilities having investing the we sector oil digital identify management and suite and promising asset increase in On our we continue our are in industrial sectors. management full DS industrial for the condition industrial discussions segment both that of awards

offerings, Aramco ground new non- in also be traction our with will we where completing our good broke Saudi and partner see on facility continue soon Saudi Houston. our to our We metallic Arabia facility with in

third XC Carbon industries continue positioning early is of for we offering On storage and product to to new footprint what existing a bolt-on hydrogen, wide pillar CCUS, see XX% momentum CCUS, stage across acquired business to an remain hydrogen the models hydrogen, or In of smaller and multiple our to and advance deploy evaluate with we acquisitions. investments available offers are our targeted through Capture, range our frontiers, technologies energy or November. chains. we We a carbon In projects. value seeing is capture Compact positive and technology several the add customers their opportunities engaged today. concepts requirements lower in to with XC, and compared that CapEx offerings across several

are that As manner disciplined and we operating our technology cash of committed execute we on evolution a these pillars three prioritizes our energy in as company, strategic broader returns flow above to an cost and capital. free

of expectations, in developed our Now, modest activity East Oilfield line areas In stabilized in in I softness an improvement the you activity on Services segments. select in fourth from of update and year. XXXX. the signs with regions positive business, that across additional will further has markets, our course give improvement the was over In each quarter in international aside some for our Middle decline late multiple with the the mostly globally

across with our half basins. recovery a modest XXXX, second largely view remains the For in several low-cost intact

different a a Middle drilling and the for North improvement geographies, expect potential Russia, half year-end solid and Latin across in we outweighed improvement recovery seasonality. activity fourth the and second America, levels, a recovery typical modest North In the in modest to solid depressed East. continue completion Sea quarter in Looking America in off

in E&Ps the into of back public to over activity as drilling Looking we improvements add first rigs. the XXXX, further year expect begin half

mode spending Although remains intact. maintenance we and moving commitment higher, the rig count discipline that towards the is believe capital

primary increasing the outlook on pleased is improving, While margin see we that our profile return remains improved operating and through portfolio actions. are this business the to gradually of focus and for efficiency OFS

and in multiple This operations countries institutionalize the and Latin in to and reduce over rooftops a on structural shut down OFS America our streams as by XXXX we During completions-related reductions cost-out select the OFS to better XXX includes operating structure. significant XXXX, margins in and years through Africa. double operating reduce further remote continue we track Overall, in executed processes. on following in facilities and operations cost plan cost our in to to believe actions work our XXXX, we both remain digits that reach coming work

our opportunities significant awarded projects in our grow valves continuing years, the of and backlog TPS, focus space. Moving new aftermarket executing services growth on the LNG energy capitalizing driving recent to in attractive our remains on business, in to offering,

compression During follows booked in we refrigerant the project main award in Qatar. quarter. LNG we the an the for additional power quarter, East third This for booked Field generation North award the

For recent momentum projects. spot the has remains of for in intact. similar prices solidified outlook for LNG growth The customers view LNG market overall, for our a many a increase long-term improved and number our demand of

gas, reach in XXXX. construction that an X Iraq Gas and for of decarbonization flared and pipeline we expect manufacture beyond the the we natural in will to XXXX, that annually. robust customers. are important re-use three part award natural with result, the forward to of our This is to LNG As by equipment solutions pipeline broad to Iraq's An projects In to a previously seek followed as enable gas compression tons secured of a gas diverse our production project million Company and for digital of facility. roughly FID estimated award to move carbon South reduce and which an our capabilities processing by four of this a of that processing highlights continue design, expect supply projects likely monitoring emissions deliver we range integrated systems we is segment,

Services, upgrade the and, TPS optimistic outlook spending maintain difficult as we customers For a after instances, in resume and for some to XXXX in recovery are in equipment. XXXX, their XXXX year about

growth particularly On market longer-term we services for customers by opportunities and look be transactional and recent during as decarbonize the turbulence, to While we that pandemic. business equipment. expect are impacted in our through resilient a traction recovery improve the services has basis, areas upgrade upgrades, led by remained efficiency excited their were recent the to contractual a of

our executed Next, efforts have several actions on portfolio Equipment, over the cost-out we Oilfield and on taken of XXXX. course

demand on fourth quarter, Connect Angola. the We of environment. business The continue won our right-sizing for well returning the XXXX over and next wellheads, Agogo tree modestly for to solutions technologies, from from and outlook an subsea a in project including see awards the manifolds. more the in a In the focus to XXXX, suite includes and oil below Eni trees, offshore prices order optimistic years, $XXs the several the few view Subsea still though challenging multiple in of face Brent for field we subsea With the improving portfolio levels. industry we market optimizing

be industry believe be out difficult low cost will the activity dominated deepwater will As that increasingly we look XXXX and term, future. longer it sustain by we for basins foreseeable that order to levels

challenging. gas and Solutions, remain end and the Digital markets in Finally, aerospace oil

a management. have our quarter, that industrial seen project awarded previously several the line an in in industrial with we some economy. fourth aerospace, extension awarded we the of were secured In We demonstrate in outside to with However, the in recovery rebound asset markets global Petrobras. end projects capabilities

a will and We reduce optimize and emissions solutions and to safety Petrobras operational digital lower risks, of carbon suite provide sites. services productivity, across

contract and a and These analytical Power asset industrial a the dams. across software, management. the hydroelectric Bently expertise X also business deploy our System are a in real-time. Our fleetwide an provide wins multiple in to secured System in Bently example X Energy diagnose industrial agreement operator to with to with of XX, remote five-year Orbit American secured contract major services deep software machinery asset issues domain Nevada management services a Nevada U.S. for monitoring

apply to the well XXXX competencies we Going on of flow the transition. the disciplined shareholders. and and these a number positioned free for over sector, forward, cost cash our against to environment to and customers, programs. delivering opportunities and navigate the current to are placed With being call and core Overall, applicable executing of capabilities these is downturn, also pandemic and on that we our cost-out strong the the will gas believe challenges global industrial see in Baker market the that, we executing significant for oil Brian. executed in delivering industry focused turn to well Hughes We remain lead on I sectors. energy

Thanks, Obligation company Digital partially Solutions, then the offset X% results move for will the segment sequentially Performance billion, Remaining and OFS were down X% sequentially billion, $XX.X X% sequentially. with orders the OFE ended was declines $X.X details. by quarter declines in billion, total Year-over-year, all and segments. and and at Orders TPS. up Lorenzo. at with were begin $XX.X down by I into driven in RPO ended RPO $X Equipment billion, XX%, X% up four up sequentially. services

by total up declines in charges. down was $XXX $X.X declines OFE, driven in income revenue the and operating quarter $XXX in for XX% X.X. of Adjusted OFS by which and Our X.X operating and separation, our offset and and year-over-year. single-digit by million, ratio company quarter the increase Solutions, was in was income sequentially, Solutions, and income Revenue by Operating quarter partially was equipment was was sequentially Year-over-year, partially excludes TPS. Digital low book-to-bill OFS, the XX% down up was other in for million. $XXX the restructuring, XX%, million TPS Adjusted book-to-bill an quarter Digital billion, X% driven offset OFE.

for Our X.X%, adjusted income sequentially. quarter XXX points basis operating the was up rate

fourth and which particularly We Corporate with quarter, in the by quarter. restructuring strong $XXX productivity. million our were actions are the driven in largely execution the improvement operating pleased was on in costs margin improvements

fourth be with For quarter, $XXX levels. expense and amortization quarter was Depreciation costs expect million in the to we first corporate quarter. roughly the flat

a slightly quarter tax valuation first tax For allowance the and was related million, by million expect to $XX we tax million, to decline of through mix expense $XXX expense Income D&A the our a of $XXX year. geographic fourth quarter gradually decline from quarter, earnings, business driven dispositions. expense in the levels and

$XX balance share as cash Although going in is formed be a share income. our taxes other XXXX. on expect fair sheet, CX.ai our recorded book when investment GAAP to earnings Diluted requires expect per line value. rate June our the decline. invested to non-operating in its billion per our tax a remain CX.ai, a in value mark CX IPO, on on GAAP investment recorded forward. CX earnings diluted in December, in income In partnership in gain in we elevated $X.XX. other to investment quarterly our Since change basis our Included were is we to $X.X will We security us non-operating XXXX, we completed our marketable fair reflected the which in million

investment, very solutions our we for with are develop we pleased industry. as and with market we pleased While are as CX and our strong new oil with the equally gas AI partnership

capital allowance of We in also view tax we loss as Adjusted our partnership share transition. as a allocation frontiers per technology unique invest our new mentioned earlier. are share good CX expenses and in example $X.XX. Included was the valuation adjusted philosophy loss per energy

of for to operating million $XXX fourth by separation was activities. free million. results payments This was statement, improvement CapEx. to cash and includes modestly the net flow Turning quarter quarter flow cash and lower cash $XXX the restructuring cash in sequential in related flow the driven an Free

TPS. pandemic, the billion by full-year partially revenue we year. primarily was operating total all number down was pleased due corporate of of segments. impact For declined declining Corporate DS. driven increase year; transactions restructuring seasonality. I of that book-to-bill Total down was OFS $XX.X $XXX decline the X XX% the volume the to year company am driven the considering million. $XX.X offset executed Total total margins OFS by X% XX% economy, down operating first the income flow in for were in billion in When sequentially that over for $X year company results the XXX financial Adjusted Orders income the completed. cash were in the global at XXXX, and disruptions with and quarter, we was by basis DS with points, I of of XX% our expect in year, the mostly billion COVID-XX the an year in adjusted to XX%, the down declines and costs we the look XXXX, declines in XX%. free significant of

expect For we XXXX, corporate to XXXX. versus decline expenses

to in efforts and the should lead cost-out quarterly a the Our gradual lower of year. course over costs separation corporate expenses reduction

the and cost $XXX our our we out been actions cash During of has less XXXX, in million majority in second with coming payback year, one exceeded average of restructuring savings the goal the of half annualized the year. than

XXXX, line the believe improved and with actions completed These greatly sale our broader portfolio dispositions in of and that taken Flow we including have the evolution further and do objectives. Overall, in the not XXXX global businesses to operations restructuring, businesses to the are margin three in quarter. strategy years. our the our exit return SPC profile addition meet our in In lay help return that for improvement in with fourth coming requirements are our we to in groundwork aligned

generated $XXX flow. cash For of we full-year, the million free

restructuring costs helped capital and We separation during the incurred are payback to achieve impairment $XXX our performance one capital than restructuring in an $XXX release discipline, million cost-out million with fourth working pleased of of to of year. booked in charges order XXXX, with we expected offset initiatives our our initiatives, as in less and cash operating cost-out results some and quarter, In lower cash and the year.

footprint our cost reducing associated facilities business structural XXXX, in actions notably cost, our our our transformation is next Following optimizing with rationalization broader align objectives. this primarily to phase with most

versus separation approach CapEx, income; significantly XXXX operating expenditures. significantly levels, improve to driven historical by and and largely higher flow cash free expect restructuring lower we cash XXXX, For and lower to modestly

quarter was improvement rate. thoughts give revenue and product to Sea, going the walk sequentially Services, and improvement outlook detail to our a will was and team strong In in the forward. North delivered and and margin results increase segment American million, cost-out point the through as a North was the the XXX initiatives declines year in favorable you down in you in led our solid the down sequentially International I restructuring $X.X on sequentially. Now well by more XX% in Operating America $XXX basis close mix. billion, a revenue the in sequentially Middle driven markets. Pacific, challenging X% quarter a market. Asia North as Oilfield both OFS the was by due income X% The in revenue XX% margin East. in quarter the land out offshore increased growth

typical ahead expect first to see though softness during we even As look the to has seasonal we largely the quarter, quarter stabilized. drilling activity international

refresh recent basis. segment As revenue in a a America, on continue of result, sequential the expect decline we in In modestly into XXXX the expect U.S. our we land international the operators as first and quarter drilling completion to spending first activity to half momentum budgets. North

we expect OFS American North revenues. result, a sequential As in increase modest a

we benefit Although due international margin in our product may fewer quarter initiatives, should the rates cost-out first sales. and modestly from seasonality decline to

expectations full-year We our earnings are the and expect call. a multiple largely the recovery view across XXXX, relatively currently levels shared first anticipate on with we the in unchanged stabilize half our For line quarter activity October activity for half second in XXXX. regions. remain to of Internationally, we in third

expect year improved in will still moment be prices recent though, the redeployment our increase budgets near-term international the remains we basis. half of and The in the revenue At outlook the less a mid-single-digit down activity range in America. back the that North in clear. year-over-year However, have on the of commodity

also year-over-year completion down a basis. that be we As in a North mid-single-digits to America activity result, the is believe in drilling likely on and

cost-out a for margin in revenue full-year, we translate XXXX. actions believe Although to strong our down improvement in OFS modestly will that OFS likely still be should

driven The sequentially. strong sequential in performance down Operating from award SPC in and Equipment, Flexibles. XX% services in higher year, Revenue orders. to improvement offset income Services and helped the Middle $XXX improvement Subsea Flexibles up cost-out year-over-year. down SPS activity. which offset East, our in with were in million, growth offset the along X% our specifically was segment, decline were and in SPS by year-over-year. in Drilling was Systems was Flexibles orders a by quarter the was help Agogo a sequential which by Moving by softness was million, Projects driven in orders million, Eni volume a This declines XX% Revenue and by Subsea Oilfield and year-over- program, XX% $XX partially $XXX

lower conversion. revenue the backlog SPS first by Flexibles For we driven sequentially to and expect quarter, decrease

We expect sequentially territory remain on in primarily initiatives. operating our based income positive to cost-out also decline but

we full-year remain selection. XXXX, portfolios markets their expect operators the the to For as and offshore project challenged reassess

OFE expect We revenue a basis the a to lower be likely continuation XXXX difficult in to a XXXX. year-over-year double-digits of on offshore environment in down and order due intake

Although in volume. be is operating offset revenue likely efforts is down positive maintain goal decline the to our our should as to in cost-out XXXX, income

$XXX $X.X TPS I orders billion, Next, Turbomachinery. for Service strong quarter project. Qatar productivity. down in the of basis prior $X.X for execute a and by for Services year-over-year. on gas TPS revenue Orders strong the awards year-over-year cover up X% The on driven Contractual to year-over-year, XX% this quarter the challenging down Petroleum's solid team were units production continue mix versus cost XX.X%, largely and revenue. in billion, pleased was higher up We versus XXX NFE by quarter income year-over-year. XX% despite we driven Onshore/Offshore were higher volume prior down year. will equipment execution. flare the by our Equipment orders Orders generation with up LNG quarter of XX% down and as the were revenue points for another growth driven was margin million, X% another with supported XX% was bookings was year-over-year, project by X% backlog. was environment. power quarter Revenue the Operating delivered quarter in Iraq Equipment Services. were were Operating the year. solid execution up for

of of years. revenue expect but first expect outlook, on XXXX in be TPS couple expect a equipment we roughly revenue. to we quarter to due sequentially higher mix this revenue flat Based roughly with versus last quarter, year-over-year the operating to first the grow For the margin line income of decline rates to

expect the equipment year-over-year the backlog revenues. of generate XXXX, solid TPS For growth, by Service to driven full-year in increase we our current modest conversion and revenue a

we mix volume. of operating Although in be a margin headwind year, next may revenue equipment in for income higher growth still expect rates higher growth slight based solid a on

were Reuter XX% the million, million, Solutions, the as to all $XXX down quarter for in most for orders by declines across million, oil driven We Sequentially, Stokes. orders and XX% in quarter Waygate down DS gas, declines most saw largest markets was Finally, productivity. to XX% revenue driven across higher product in volume. seasonality was was income year-over-year up by and Revenue improvements due the some the for Sequentially, XX% notably end-markets, and down orders transportation. and operating X% in industrial lines, industrial. up lower and by volumes begin $XXX quarter product were end XX% all power in year-over-year driven Digital income was cost recover. lower lines transportation, year-over-year. with some Operating across $XX up Sequentially, volume

first single-digits. the to rates sequential declines typical in we into line quarter, For and operating with see seasonality revenue the margin back expect

for markets. a margin fourth Overall, low the we into backdrop. With rates we Looking a a in can benefit am revenue difficult in and I year the the the modest double-digits of end the our get and higher DS amid driven quarter believe full-year. year-over-year by in pleased with macroeconomic execution primarily increase industrial to volumes expect on back recovery cost-out total basis, program, XXXX, a

I will some call over execute. to Jud. While financial we and confident margins remain We challenges, on to focused have that, turn in XXXX our flow returns. back free cash the and ability and are With our improving strategy may

let's it up Operator, for Brian. questions. open Thanks,

[Operator you. Instructions]. Thank

comes Morgan. first from JP question with Our Sean Meakim

question. with proceed may You your

XXXX. especially A the like off, start if like we capital flow I’d without the cash It good result bit momentum looks fourth a into more to quarter, could. help. to any in free dig good So really in working

it comments. So XXXX, pieces his versus XXXX on Brian moving of touched lots in between

operational core improve. should flow cash So

but We’re a be recur, taxes cash working and charges, the tailwinds should progress restructuring severance restrained, going payment capital bit. to don’t CapEx little pretty lap likely probably help

dividend be of billion $X in, XXXX? Is any in shouldn't translate we cash that an So, cover all free issue. flow, reason into north shouldn't there why

neutral little got of Yes, further Sean. pieces did just I should the really I And back free on XXXX, you activity depends I there, from or play new on source and on a now, to it we’re in cash XXXX, level. orders Look, how bit Working sort right specifically see what modest a seeing levels earlier would it capital now, think what would and progress say, assuming I'd OFS based say decline you’ve XXXX. based versus right that. payments modest seeing earnings historical and elaborate saw we should cash to out as to flow of levels, XXXX on play seeing turbo And what I in out similar be on expect higher activity we're expect right and hit levels Sean, I'm couple, things a how you now. mentioned. CapEx specifically, a OFE. get in

is mentioned, be expect look, refunds expect decline also in really changes largest as that which XXXX. charges, tailwind to the do And will cash earnings separation we come in as restructuring mentioned. taxes and XXXX, you some should to I we cash the be a while you to expect material As in reduce so higher,

teams upside pleased key our The restructuring pretty material all improvements construct got performance for all of support made. I are the earnings, with a metrics are good the in metric over from process the about this, in good increase we've there should So it's feel have performance and XXXX. and cash a overall, that improvement.

on trajectory. that appreciate I'd touch the also to order I feedback. like TPS Understood.

gone the surprise inbound the about that across not was a board. was So expectations strong. among business, and hydrogen debate XX% for year-on-year We're investors is hyperbolic. trajectory XXXX, TPS and XXXX showered The awards late pandemic nice as given a resilient. today LNG the sentiment This Yes, in most quite particularly called this common a of have has good out. awards very the you off

your the buildup we XXXX book-to-bill above your line versus a equipment next in base in got of can awards, thinking awards few in years, I'm X or opportunities. of awards, of just about talk about and sight may keeping So a larger you've be of LNG just of got for you’ve beyond? downstream expectations then and time of kind service kind smaller at

order Yes, what Overall, outlook XXXX change slightly we and The to XXXX is we similar that in think Sean. for the booked year-over-year. could roughly XXXX. mix

XXXX. will you on saw towards to some four in beyond robust followed side, But good pipeline reach with, LNG seeing projects three the expecting XXXX are we again, of XXXX in to As by in and LNG a mentioned that momentum continued we bookings move FID FID that XXXX. projects also continue

And lot discussions. to but believe On demand we So it be again, perspective, the their activity pricing continue to and that at go-forward. well same. LNG and are as said, continue roughly theme of their as increased is XXXX services, focus on traction outlook hydrogen we're as seeing and about seems with opportunity customers you look customers from to the of resume optimistic and conversations the CCUS same be LNG energy increases as the opportunity as upgrades as on a demand XXXX Outside continuing the with with given There we the could current the the some onshore/offshore we have equipment. customer XXXX mix continued what to positive. And also set for as the between valves XXXX. maintenance movement you areas, for of opportunity we of transition, and a roughly in equipment, saw other

increase services potential TPS there is for decarbonization So in in underappreciated has been and we think there the XXXX, theme XXXX.

XXXX, roughly overall So, XXXX. again, similar XXXX to

you. Thank

question West James from ISI. comes Our Evercore with next

with You may your question. proceed

the what the key the you Lorenzo, being and industrial elaborate are seeing, the in your you’re you kind release industrial those? key essentially commentary, particularly on you Could number had of what Digital part to wins I trends how noticed of Solutions Could go? pretty other of one business. was the verticals, strategy of on to side in significant more elaborate we further in much have business, move a the bit and a perhaps there the into of what on a

Yes, James.

seen increase. them our industrial to them that invest landscape, zero that seen in that a on and opportunity companies of to second growth, think you've pillar I footprint, to look commit portfolio, we've their got helping And really you an carbon decarbonize. the at net to are aid number propensity of decreasing in for you've when looking

that cement, at mining. areas look areas of much at That's an it's we pulp provide strategy valves, portfolio management. opportunity helps paper, we of and we're with have on turbines, the So CX And are the that food gas you us. line condition where digital monitoring look and of from well seeing you and asset and very look of beverage, also you in at the side as with executing to industrial increased as then existing relationship pumps, also

increased we company. So, the in with intensity discussions we the way from customer is in the seeing this which line transforming are and are very much

Right.

on it we've recently. maybe kind From maybe themes. Could the of a thought. follow-up thoughts is then longer-term the hasn't maybe main as CCUS have that. adopted outlook but as we go And and something seems hot to like becoming it discussed and my as and mitigates capture? carbon you Rod a Well, carbon-neutral, pathway would been rapidly Okay. near-term one perspective, maybe topic, give discuss the for your I

again, in involved projects And the seen key We're we're acquired where mitigate recent we a being the the XC, market LNG for we see the involved customers. and are that’s very carbon been the the of XX announcements of COX actually in emissions. capture Capture, to, CCUS in opportunity about because equipment number you've some of trials moment. the over the And also reasons with Carbon James. footprint And some of one feel for of some we of Compact some we've why there. of at November dialogue and Yes, time useful smaller the outlook confident in looking

by XXXX XXX and by today to increased at already of an also be that look million tons there's carbon tons billion you up to capture said As the then X.X and XX to XXXX. IEA going requirement tons from it, million

the important give precise and to number, as the an in three next see then and fast to clearly agree that continues customers and by but to something we the years. hard portfolio that a one area orders but through grow followed coming of you, would it looking expect it's it at it's to you probably hydrogen part clearly moves So with others, And I is are already.

Thank you.

Sedita next Goldman question with Angie comes Our Sachs. from

You your with question. may proceed

Hi.

And the tepid stronger to I You additional start the the and on know year-end color So growth into spoke Lorenzo. right? around your you markets, momentum up XXXX, to for international what talk your XXXX. degree recovery to level don't for the if activity of the and but spending, gaining year could outlook, about is maybe into the dialogue? you outlook most of have activity then, customer, E&P XXXX, pace visibility of

in do improve changes. Yes, no if to recovery solid North to Middle the and Angie. obviously remain multiple activity material we looking across to to and half America thinking is lockdowns first Sea some mentioned, that as after of the Also half activity framework the modest on virus maintain the we there And impact is expect recovery That a depressed potential there. Russia. in for continue ongoing things second current expect recovery it based expect in in increase But which we stabilize impact would in a geographies, second as East, a XXXX. levels. a levels improvement the half at framework also our that or regions. We start obviously Latin the unchanged a from minimum, the and And from relatively

and look some On we markets, Brazil at West in similarly stagnant like areas in but Africa. mixed, as Norway, the areas also, improvement offshore some

seeing. I XXXX think, we a the look macro down an international, we’re as stronger on So — still year range is likely XXXX, be half. digit the given international to second basis our we uplift sorry. at in the with mid-to-single in year-over-year expect will a that assumptions be that revenue just

have I figure to appreciate Lorenzo. Yes. I that out. Helpful. that

done program. potentially a I of on OFS And portfolio. hear onto the more margins. to assume So Good there’s to be further the cost-out realignment

exit maybe Is then So for margins? maybe, possibility XXXX. the by around margins the of additional given realization is around the efforts? double-digit XXXX. even there cost-out path thoughts rate even there of around Brian, color And the a color And late

in based realizing color about give mentioned, responding be seasonality I that I the will could I cost in think, come down And well as the quarter. way seasonally it first around half think quarter. additional any benefits already through of be of should as the I'm and lower then and beyond And slightly in partially done, activity. should in in year. in great you sales. multiple little cost-out years benefits of product specifically decline and margin the quarter, offset team terms first through first, accretion Yes, the more the carryover, the that job rate first that with a work margin really the come I benefits the second Angie, But see mean, volume that mix as has just we'll by And feeling as to transform volume good recovers the the we've seen on environment to operates. the about quarter, business recovery the we back a then to as

And rate announced. that programs got continue and on that started here execute you And incremental in have So, in rate I fourth will margin as we if restructuring benefits coming efforts just show the benefits be we about you’ve that got here, and quarter. restructuring with to the high-single-digits upside exit no quarter the all the that you've team fourth see think the business been reaching to has be program. the some And assuming the by there in to I a should or they've that in volume. shot unexpected mix, performance these we depending think think on how is Angie, executing double-digits at and change the about shown in having through the geographic product

how trajectory. think OFS about good I about tailwind feel a that's to margin the and think for So

you. Thank

Chase Our next with Mulvehill of from Bank America. question comes

proceed your question. with You may

topics, wanted LNG Hi. to the to back today. of just come kind I I guess, prices are pretty strong

kind bit want little customers. million levels. are if And LNG order to services, LNG below you the the of that mentioned front, having previously. the and maybe assume this of a of what talked conversations And you’re having on revenues it's can side, think and impact you on to XXXX understand it then, look just I stronger as to service prices so kind your secondly, having you on positive And service kind a impact the some the are But first you spoke we of is about impact talked some to with it at model, have $XXX XXXX rather I'd on of transactional upgrade that the business?

back that So can get given $XXX side. stronger year we service the on that LNG think million lost prices, when you last we do

FID. see I'll the customers we projects of saw towards you give And beyond a that, it a see to we And outlook. mentioned look we we And at particular, And resilience of in LNG to we if to XXXX, projects kick the going as again, the solidifying we XXXX. just Chase. see at again, moving Asia to off for LNG that shift. and And we pleased we are continue gas in number out. view continuing four discussions you that here. demand as with increases, year, current again, ongoing. three the look were see also with again, And coal in this

look need tons place. of to capacity approximately million of XXX have a by at you perspective, it from longer-term As to still XXXX we in LNG XXX

to three you're next looking so over course tons million the XX at four to of tons XXX And years. FID

So very in in that place is this space good that continuing. and about trajectory feel much our feel we opportunities

has relates this Yes. much out to we the And play as And I’d that remind it year. agreement. overwhelming out of Chase, to on specifically majority LNG around LNG. played services as these contractual are revenue it pretty services you expected services that that

service RPO start that’s LNG. and service more impacted really new and as on in that these will you booking online you for to dynamics the term and grow isn't the I So we're come in though, back service the of as you say and the other LNG really of much term see CSA's see in agreement into year will the come parts quarter. by some RPO LNG orders did portfolio. shorter CSA's, the And contractual of things and see longer

the three majority long-term I Taking over overall think about a I to sign-up step services the XXXX though, looking a back next it give years. agreement. As said, and at timeframe, wide how getting and I to back TPS for overwhelming the service maybe two these baseline.

Transactional customers revenue we is of are based some some And that difficult, normalizes they back good say, cut. levels the really those pretty but said, one I expect which maintenance CSA that hearing the delaying upgrades, in how this And operators given I'd activity services on what customers. probably first of bucket do discretionary visibility, the year we contracts XXXX when items those. as should deciding been As stopped see nature operate usually it and recovery got Chase, is of predict is has most and resilient. tailwinds we're nature truly to and revenue from to difficult is we've

it the carbon are get we cost for constraints various performance, talk positioning, while upgrades reasons, budget levels. a Again, to remain then about of if mentioned. Lorenzo say, little I'd to some customers back also seeing and could place, in So that take areas XXXX better capture upgrades

So I'd I levels. a why when the clear less to that’s about XXXX three is on say visibility to getting two say in bit years that area back

talk Okay. nice a shift can a awards If Maybe some bit really little press IPO. in Helpful we release CX there. we here, little BHCX. update gears obviously and saw and the a nice had about

fully having of success are, across briefly you enterprise. you're external opportunity on where And kind exploiting, talk the you AI hit maybe kind kind about of side and so, your of could that also the

the entered is where we've customer have increasing year a are providing on across Very I intelligence this landscape. we it’s to because an and pleased theme artificial aside partnership. really IPO, we the into that for just partnership that relationship over energy the our CX with a relationship, base Put and really think of this strategic

are a onto applications we’ve the number We put seeing of that marketplace.

non-productive reducing drive And for intelligence as introducing for the our the time in artificial productivity, have platform drive seen element Asia happened really and well as You've CX aids the that Latin has the the awards that of in place. America.

we're internal artificial to some think we towards our our drive of also will see and well on with traction our reducing of then intelligence that improvements downtime. taking continuing good inventory, our utilizing So we’re processes, the unplanned base. within and base customer continue Internally, as the with process as it manufacturing

how the at take customers own our at we provide. drilling et excretions in equipment, we as of and Looking cetera we place looking anticipate, also to the and that we of taking and some some at services seeing again, the that our are provide look increasingly services information –with different

an is with to opportunity happy very I'm partnership. committed the how that it’s proceeding. grow this to continues So

our exciting starting software. M&D through just And, condition-based add Chase, own one to that AI pull And Yes. I’d most thing, opportunities and hey, our there is promising around sale services developments of CX monitoring the say opportunities term for some seeing with offerings ESPs. out are with some we're I'd the solutions near

opportunity our an we base CX provide value expanding see the offerings to that service portfolio. So customer look, that can we expand alongside our advisory by

see the play we teams, some we are, when we this with continue to of out to that we opportunities the investment. made again, work exploring as So were starting

early this in and I long-term think partnership. to continue we're be is going to stages great So here a

you. Thank

Our next Barclays. question comes from David with Anderson

question. your with proceed may You

Lorenzo. A there. investing of for pillar morning good around your growth Hi, couple questions

talk mind? next mean, longer demand you Because Asia, global benefit think than have of looking of that in out cycle chemicals oil I was to about these facility So wondering businesses. would with over artificial more peers. exposure years. just in some mentioned your kind build those about more billing the lift I would of you you’re most. I and chemicals as you recovering few I businesses think kind the Are

an is if investment. this for more So wondering I’m further area thinking that you’re about just

the say demand improves, good chemical to from David, will the in line. look, again, we ESPs, continue we like the our have and feel that our product good you side, feel place oil production And about lift we we positioning we on artificial and as technology grow side. about

look of Arabia opportunity side, actually announced Singapore at chemicals our downstream in enhanced Kingdom investments into chemicals of the both and continuing but On also further you and opportunity the with recovery, in well. go yes, as business the and increase, the an also chemical Saudi Asia to to we’ve oil as see especially we

good look areas So trajectory, at you of the forward. those feel prospects as growth going we about are, both

investment And then the to sticking for growth. on

topic on the You there. before sure business, your big be is up about the is how digital new there. shifting a release it administration to digital methane mix touched about we in, the If think segment and bio coming

You about have fruit Biden could a market yet? that for to there. now? within few about number talk starting of And low hanging how really the next like of kind years? customers that talk in products over develop It that of your Are there for can right fit you could you it's seems just kind

emissions base, of of whole management people aspect are we the emissions. administration, focusing increased customer the and on the seeing Dave irrespective just from the traction Yes. and

the the our Newmen. got saw with customers we've be the You the with got Senses also administration, now technology drone-base, in earlier we conversations during place. It'll [ph], Obama happen it

provide. our it’s a service as as customers, increasing are So again well can conversations and solution with a point that we both

as energy our to at decrease opportunity customers we their an see really transition we So, look help emissions.

for and got is -- is Yes. got continuous Lumen stated just we’ve with both which I Dave, methane add our with mentioned, Lumen And Lorenzo us Sky, drone aerial publicly emissions. base. we’ve point. Lorenzo working which the here on Lumen Shell to that they’re as has technology Terrain and monitoring

identify than can this we much And do can fleet where is look, asset, occurring. we leakage, a we quantify it’s actually for ways technology better traditional into particular can drill So leaks, destructive emissions. less And trying methane wide, determine accurate. they the is be are you there and if carbon worse because environment around XX know, times to as quite can than for methane down

a coming that this and world. got to see great So is uptick is an the in in that the do offering expect more to years. And think important we area we’ve

you. Thank

from Kurt comes with RBC. next question Our Hallead

question. your proceed may with You

that. thanks Thanks for that summary. Hey, for great

there the generating investor capture, kind in transition any revenue one. in the Baker what can quantify potential the to really about is sense for in that see, that's the And energy more us CCUS from providing? you products for -- terms I'm way you're of is currently Lorenzo, addressable then concept these terms of can business? of and Maybe as of you're right, in some the on carbon you specific total growth that want market that general So Hughes investing give base help you both talk terms continue importantly currently and services what then

at I'd small I'll base But capture, start energy that portfolio each product storage a our look like out depending on look, supports in here. companies. define Kurt, today, for things that. There's you of terms the relatively revenue hydrogen if revenue carbon lot in of how you energy transition. Yes. say,

think over it, about is it start few talked the -- see about carbon I Lorenzo capture to look, through So first the you'll area has way probably is where next some come meaningful the revenue years.

We are acquisition in world. pilot made just technology XC. in projects around the We've a

So lots of there. activities

As in been today calls, for for are we Basically uses we’ve earlier hydrogen about talked elementary hydrogen compression decades. our in have on hydrogen technology. and in

to discussions storage starting same with the front. and see energy So on we're customers thing there

and think I digital technology in turbo way monitors the monitoring areas, will we about and machinery is, condition-based sensing in around they some build faster particularly of the So, growing as out be that. solutions and it

offerings. grow faster they make -- of will -- go fast be new will machinery be because they will that think I So things these turbo

the depend three the in these carbon economics market best look, the that happens piece overall how years. capture will So acceptance of next the opportunity projects, the say, is think one in I'd on short-term I it and but to really

you happening world. at again, what’s Yes. if at it, look the around and Kurt, just look

strategy. CCUS, well we line much you discussions hydrogen at for will look the you it's look when net and a You’ve got But zero committing again we're number it's difficult have, got zero; you've at growth as this on when precise zero. companies net even that committing all are to of negative put this now it, the area and to to And in stage. net be us that are of portfolio countries at having these as with our very an

of well transition where these also that's why take I time So do a frontiers. energy seeing the growth the us the we're pivotal that But investor in you're very to continue some this technology good as that And will in new technologies that. at we'll feel bets continue we've the taken accelerate. move new towards as smaller point and and to

appreciate That's And one great. Brian, on follow-up. your that. I part. just

thing. the free to dividend thought have quite Is than want substantially Just one to you'd flow fall. But higher flow XXXX. in cash wasn't XXXX in a that clear I not clarify would whether that be to sufficient cash cover as or you free

those Kurt, I expect well would with seeing be -- mentioned, of what XXXX And I in in levels it and dividend based you to our if in I’m recall, today, excess on year. I were at XXXX. line back as covering we

again, the and process So we’re running business the cash in the flow free way XXXX. supports I think improvement, the framework strong

Thank you.

question Bianchi Marc from Cowen. next comes Our with

may proceed You your with question.

energy of transition build-out missing participate think M&A. a stuff in that bit of And Baker Turbomachinery. most a as stuff you what capability up revolves capture follow would that you if kind other these in offering like far through so this is in on any? of I'd sense carbon pieces the to equipment the that we some and that, Thank markets, wants about and call. are organically your either to compression or how reasonable the of around But have to My what mentioned you. the the you be timeline for portfolio,

as the post-combustion we're capture standpoint, East just in are we as and in compression, integrity Marc, from taking been we is take carbon key involved, capture, like ourselves as we So also and maybe Australia, the projects and consulting where some well you compression and mentioned go-forward, evaluation monitoring. has the back, areas storage design there longtime a reservoir step services of place but modeling in playing Middle and construction, And see active. reservoir projects already the of subsurface the

those you have. are at portfolio, we our that capabilities If look

course this again, interest in base two over something compression. CCUS. to customer So, we We the our already we're continue years, it's is see three seeing than trials really and expanding. that of from mentioned we're just increased on XX But next to more

some beds Marc, and the in technology our had it. that capture commercialize incubated is that we pilot talked now versus believe compact stage. accelerate And including specifically a we technology uses important and talked the with static And it's I'd carbon technology traditional versus we about I say, was And and are that Equinor XC, believe we just that look, acquisition rotating earlier partners, distributed technology columns, the pioneering this we think key currently can that differentiation modularize and solvents Lorenzo about. mean is format. it

And so XX% in have footprint, that to reduction solution. allows combination to OpEx us and CapEx leading lower lower a

a developed, again, and or So leader to space. And have us a business come is, with machinery in And Solutions, know-how, offer know-how we already technology start as with progress our things in can what conversations lot very a our area. we what's all this be in would customers. to manufacturing that leader turbine help continue is you I imagine, our think and technology this we with powerful space going think our become that the offering combine to a obviously, that there this have of was to from with some there show Digital this in new

Thanks that. Right. Yes. for

just increase appear sort historical been look installations, of it I of within five I up was for XXXX. one have had other that on the at a we TPS. service and facilities is would years there as of sort enter CSA LNG large capacity The running If quite

the here. be surprised that inflecting see you to that XXXX? you inflecting why service And out? piece of playing hear TPS Could that I that to not So, talk in maybe to how business going might within maybe be isn't was

really gas. details, when and view on is whole of it said, when as got of the cash really well. terms how the operating event I equipment And within environment always outage our of devil portfolio and that visibility cash and of we've And Marc, actually for depends type the as is known good that in happened kind that of performs the is these major in into Look, how Yes. happens. known flows and is flows a it's pretty attractiveness operating, the the CSA customers portfolio

the we’re outages, and we’re right terms is view that what seeing There in what on six around always move the with months. working that’s plus or on. of So sort for based customers of particular now things and minus to machines basing room

some we on said area based an come what now space potentially I’m So that But it seeing, right see could I be in XXXX. upside terms could where feel what we with through. view in of confident how we

you. Thank

comes Jacob Lundberg Our next from question Credit Suisse. with

with proceed may your question. You

Hey, good in. morning. me thanks squeezing And for

Hi, Jack.

to I of morning. to the expand in Asset expanding time the grow Hi. you’re the industrial opportunity on to set and you wanted just that strategy sort looking efforts your Management at spend industrial Could sector Good some through business. with on just Industrial please? respect

also emissions world. go zero lot focused Yes. net goals. reducing of A the again, Jack, and are you seeing if back to on around industries what we're happen

at to management. which where turbines got you’ve and are at emissions got paper, you’ve portfolio journey, Solutions, condition got TPS actually well got help capabilities food And all monitoring. When and them industry, you on our the you actually you’ve within our today introduced, we our decarbonization look light and look industrial. industrial pumps, their portfolio, look Digital as is So as These gas cement got as look you at valves, at we've you pulp produced. you emissions areas energy are consumed beverage,

and customers it’s around associated an can for really help the meet growth, goals adjacency our in industrial ambitions zero. go and net their we to commercially where So sector continue invest with out

seen across within working strategic an opportunity paper, increasing see of industrial you’ve of part number energy it’s a value are of that customers, and announce feel us we for space. these chain our an pulp and and aspect before us opportunity that conversations and So the on we

you non-metallics, Okay, effort about related, I how to your guys then grow M&A, mean, bolt-ons. capture you this from large a talked but scale today. about are well. an to And talked or thinking augmenting you've have hydrogen be ongoing you -- Do of here expect efforts about organic in efforts either markets as great. with we lot carbon or

win Asset got to today. in in-house instance Jack. for to and we we've Look, for Yes, the know-how need And do been what a lot doing of asset Management we’ve decades. management

to that us far make So and add with ones have I nicely a you other over are technology, is reach. industries attractive. relatively some the Saying quite not integrates that already jump investments what CX XC, have though, it investments, think seen some in-house. Its augment those like capabilities portfolio, small that think types we of the in we good investments are some

that things for the from keep you screen a those kind now. tuck-in that’s anything small large-scale where the So of be changes. we’re things those need tend types if radar right and on to But perspective, for moment. our head we’ll of today opportunities don’t now. like the right posted those and we continue guys is the technologies that at that seeing And work my any acquisition see are to I

think to thank our so call want joining for today. to come look, we've time, I Well, I everyone

they strength leave our I thoughts. the the you our we and just portfolio returns quarter illustrate further Baker landscape. energy We're we very and and end, believe and margin objectives on to our company as fourth pleased year execute Hughes' of closing results within total want some with the with Before evolve

executing and just all Operator, to for transform to storage. you speaking call. want free you the while the for look I thank investing an And close with pillars generation execute time strategic prioritizing positioning you again growth soon. of cash again, to strategy areas of like and energy and strategy, on technology returns. our frontiers to the flow forward three We energy We're can new taking continue in the to becoming hydrogen and company for CCUS, core, committed

call. you This and ladies today's Thank gentlemen. you, concludes Thank conference for participating.

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